What Is a Tax Transcript?

By Markets Fool.com

Most accounting professionals will tell you to retain a copy of your federal tax return for at least three years, since you never know when you might need it. You might, for example, need a copy of your return when you go to apply for a mortgage or student loan. Furthermore, you might need the information from a previous return to file an upcoming return or respond to an IRS inquiry.

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But if you misplaced an old tax return, don't panic -- you can get a tax transcript with all of the relevant information you'll need. A tax transcript contains key information from the federal U.S. tax returns you previously filed. Best of all, you can request one from the IRS online for free.

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Types of tax transcripts

You're often required to provide tax information when applying for a loan, whether it's to pursue a degree, purchase a home, or fund a business venture. If you don't have a copy of the relevant tax return(s) on hand, you can still get at the information you need by requesting a transcript. Tax transcripts contain most of the information found on original tax returns, only they're cheaper to come by. You can obtain a free tax transcript for the current year and previous three years; copies of your filed returns, by contrast, will cost money.

There are five different kinds of tax transcripts you can request:

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  • Tax return transcripts, which show most line items from your tax return as it was initially filed, including any accompanying forms and schedules
  • Tax account transcripts, which detail any adjustments made to your tax return after it was filed
  • Record of account transcripts, which combine the information from tax return and tax account transcripts
  • Wage and income transcripts, which contain data from forms such as W-2s and 1099s that are filed with the IRS
  • Verification of non-filing letter transcripts, which serve as proof that you did not file a tax return in a given year

How to get a tax transcript

The IRS makes it easy to get your hands on a tax transcript, as you can request one online or by mail. You will, however, need to provide some key information, like your Social Security number, date of birth, filing status, and mailing address from your latest tax return. Best of all, if you use the online platform, you'll be able to view, print, or download your transcript rather than wait for it to arrive by mail.

Keep in mind that if you filed your tax return electronically, it generally takes anywhere from two to four weeks for an associated transcript to become available. If you filed your tax return by mail, expect to wait about six weeks. Furthermore, your transcript may not be available if you've yet to pay whatever taxes you owe.

One more thing: Your tax transcript won't tell you when to expect your refund. Tax transcripts are simply designed to provide key financial information based on the forms you've previously filed. Still, they've been known to come in very handy in the absence of an actual tax return.

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